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See the real purchasing power of your money across decades. What did $100 in 1990 really buy?
Step-by-step breakdown of the compounding inflation multiplier.
The Inflation Time Machine converts the purchasing power of money between different years using historical average inflation rates. It answers questions like "What would $100 from 1990 be worth today?" or "What did today's prices feel like back in 1970?"
Understanding inflation is crucial for financial planning, salary negotiations, and evaluating long-term investments. This tool uses decade-averaged US inflation rates to provide a reasonable approximation of purchasing power changes over time.
Scenario: Your grandparents bought their house for $50,000 in 1985. What's the equivalent in today's dollars?
Note: This tool uses simplified decade averages. For precise legal or financial calculations, consult official BLS CPI-U data or use the BLS Inflation Calculator.
Purchasing power is the amount of goods and services you can buy with a fixed amount of money. Inflation erodes purchasing power because as prices rise over time, each dollar buys fewer goods. For example, $100 in 1990 could buy significantly more groceries than $100 today.
The CPI measures the average change in prices paid by urban consumers for a market basket of goods and services. The Bureau of Labor Statistics (BLS) tracks prices of about 80,000 items monthly. The CPI is used to calculate inflation rates and adjust wages, benefits, and tax brackets.
Nominal dollars are the actual face value of money at a given time. Real dollars are adjusted for inflation to reflect constant purchasing power. When comparing prices or wages across time periods, you should use real dollars to make meaningful comparisons.
The 1970s saw stagflation due to oil embargoes (1973, 1979), expansionary monetary policy, the end of the gold standard, and wage-price spirals. Annual inflation peaked at 13.5% in 1980, dramatically eroding savings and forcing the Federal Reserve to raise interest rates to over 20%.
Common inflation hedges include investing in stocks (which historically outpace inflation long-term), Treasury Inflation-Protected Securities (TIPS), real estate, commodities, and I Bonds. Keeping large amounts in low-yield savings accounts typically loses purchasing power over time.